Wall Street wary as inflation data looms

Patria Stodghill talks with vender Susan Mendoza while shopping at Eastern Market as the US struggles with rising inflation May 20, 2022, in Washington, DC.

Brendan Smialowski | AFP | Getty Images

This report is from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open brings investors up to speed on everything they need to know, no matter where they are. Like what you see? You can subscribe here.

Hang Seng rallies
Hong Kong stocks led gains in Asia on Tuesday as the Hang Seng index extended gains, while mainland China’s CSI 300 also rose. Japan’s Nikkei 225 and the Topix fell after January’s corporate inflation figures came in higher than expected. Overnight, U.S. stocks ended mixed as investors await key inflation data for clues on the Federal Reserve’s path on rate cuts. The S&P 500 and Nasdaq closed 0.1% and 0.4% lower, respectively. The Dow eked out a 0.1% gain.

China’s valuations too low
Shaun Rein, founder and managing director of the China Market Research Group, said valuations of Chinese stocks are “way too low.” While China’s economic struggles have battered its stock markets, the strategist added investors “should be looking long-term at China again, it’s definitely investible.”

U.S.-China decoupling ‘in full force’
U.S. curbs on China will increase as ‘decoupling is really in full force,’ noted Steven Okun, founder and CEO of APAC Advisors. “The question is to what extent and how broad will it be,” he told CNBC. His remarks come amid moves by Washington that could lead to a ban on TikTok.

Web inventor’s top predictions
Tim Berners-Lee, recognized for inventing the World Wide Web, told CNBC his top predictions for the future of the web — and how it will be transformed by Al. This comes as the web turns 35, which marks a key milestone in the modern technology’s development.  

[PRO] Barclay’s three global picks
Barclays picked three European stocks for investors to consider buying for the next quarter. The bank’s strategists noted they have a “high conviction” on the stocks since the “risk-adjusted returns are attractive” for these companies.

Wall Street is bracing for a key inflation gauge that will once again test markets.

February’s consumer price index due today is pivotal for clues on the Fed’s timing on rate cuts.

Headline inflation is expected to rise by 3.1% on an annual basis, based on economists’ estimates.

Core inflation — which excludes volatile food and energy prices and seen as a better indicator of price trends — is expected to rise 3.7% year over year.

Markets got a nasty jolt when January’s CPI came in higher than expected. If February’s data also surprises on the upside that could reignite investor fears that inflation remains sticky and the Fed could delay lowering rates.

“The February CPI report today probably will be better than January’s, because we expect smaller increases, or even outright declines in some of the components which caused trouble at the turn of the year,” Pantheon Macroeconomics wrote in a note.

“But the consensus forecast for today’s core numbers is a solid 0.3% — only nine of the 62 forecasts in the Bloomberg survey was 0.4% — and markets will be unhappy at an overshoot.”

Last week, Fed Chair Jerome Powell said the central bank is “not far” from cutting rates, but he reinforced the need for greater confidence that inflation is easing.

 The Fed chief faces a tough balancing act of trying to tame inflation without derailing the economy.

— CNBC’s Jeff Cox contributed to the story.

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